The Davenport Plow Co. v. Lamp
| Decision Date | 04 June 1890 |
| Citation | 45 N.W. 1049,80 Iowa 722 |
| Parties | THE DAVENPORT PLOW COMPANY v. LAMP |
| Court | Iowa Supreme Court |
Decided October, 1890.
Appeal from Scott District Court.--HON. ANDREW HOWAT, Judge.
THIS is a proceeding by petition, asking that the defendant, an assignee, be ordered to pay plaintiff the amount of its claim arising on account of money paid by its treasurer without authority to the Globe Plow Works, which was used in its business and in the payment of debts. There was a trial to the court, and a judgment for a part of the sum claimed. Plaintiff appeals.
REVERSED.
Bills & Haas, for appellant.
W. K White and Nathaniel French, for appellee.
I.
There is no controversy as to the controlling or important facts of the case, which may be briefly stated. The plaintiff and the Globe Plow Works are each corporations. The plaintiff was settling up its affairs, having ceased the manufacturing business. It held notes executed by the Globe Plow Works which were in the possession of its treasurer, who was induced by the president of the other corporation to discount one of them and pay the proceeds, amounting to more than five thousand dollars to the Globe Plow Works, which was used in its business and the payment of debts. The transaction was in the nature of a loan to the Globe Plow Works. Its president promised to see the money repaid to plaintiff within a term specified. The treasurer of plaintiff had no authority to pay the money to the Globe Plow Works or to make a loan to it. The Globe Plow Works made an assignment for the benefit of its creditors, the defendant being the assignee. The court below rendered judgment giving preference for a part of plaintiff's claim, on the ground that certain payments were made to creditors having the right to preference, which would require their claims to be first paid by the assignee. It was held that plaintiff for the balance of his claim was entitled to no further preference, but an order was made for the pro-rata payment thereof with all other claims established before the assignee.
II. It cannot be doubted that the Globe Plow Works held the money subject to the trust with which the treasurer of plaintiff was charged. The president of the Globe Plow Works, who induced the treasurer of plaintiff to advance money, was fully informed that the funds belonged to plaintiff, and the treasurer had no authority to loan or advance them to the Globe Plow Works, or its president. The funds came into the hands of that company charged with the trust under which it was held by the treasurer of plaintiff.
It cannot be doubted that plaintiff could, by action, have recovered the funds from the Globe Plow Works. Such recovery would not be as for a debt, but for money received subject to a trust in favor of plaintiff or the cestui que trust. The right of recovery would not depend upon the ability of plaintiff to trace the money, the identical coins paid by its treasurer, and discover them in the hands of the Globe Plow Works. That right is based upon the facts that trust funds came into its hands, of the trust character of which it had full knowledge. The trust attached to the money and the Globe Plow Works became liable as having received, and as holding, trust money. The money was used by the Globe Company in its business, and in payment of its debts. It became liable to the plaintiff to replace the trust funds with other money in its possession, or with money realized out of other property. Of course, the Globe Company and its stockholders can urge no equity nor reason against the enforcement of these rules. Can its creditors? We think not, for these reasons: The money was wrongfully mingled, as it were, with the assets of the company. The money did not belong to the Globe Company. The creditors, if permitted to enforce their claims as against the trust, would secure the payment of their claims out of trust moneys. If they are not permitted to do this they are simply denied the remedy of enforcing their claims against property acquired by the use of trust money. They are deprived of no right; for the property acquired by the trust money became subject to the trust, and,...
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